Consumers sovereignty refers to the power and influence that consumers have over the allocation of resources in an economy. It means that consumers, through their purchasing decisions and preferences, determine what goods and services are produced and how resources are allocated.

Explanation:

Consumers have the freedom to spend their income as they like:
- Under consumer sovereignty, individuals have the freedom to make choices regarding the goods and services they purchase with their income. They are not forced or coerced into buying specific products but have the liberty to choose according to their preferences and needs.

Consumers' expenditures influence the allocation of resources:
- The choices made by consumers in the marketplace have a direct impact on the allocation of resources. When consumers demand more of a particular product or service, businesses respond by increasing production and allocating more resources towards meeting that demand. Conversely, if consumers show less interest in a product, businesses may reduce production and allocate resources to other areas.

Example:
- For instance, if consumers prefer electric cars over traditional gasoline-powered vehicles, businesses will invest more in the production of electric cars, leading to an increase in the allocation of resources towards the development of electric vehicle technology, infrastructure, and related industries.

Consumer preferences drive innovation:
- Consumer sovereignty also drives innovation as businesses strive to meet and exceed consumer expectations. Companies that successfully identify and respond to consumer demands are more likely to succeed in the marketplace.

Example:
- Smartphone manufacturers continuously innovate and develop new features and technologies based on consumer preferences and demands. This includes advancements such as improved camera quality, longer battery life, and enhanced user interfaces.

Consumer sovereignty promotes competition:
- In a market economy, consumer sovereignty promotes competition among businesses. When consumers have the power to choose between different products and services, businesses must compete by offering high-quality products, competitive prices, and excellent customer service to attract consumers.

Example:
- The presence of multiple smartphone brands in the market, each offering unique features and competitive pricing, is a result of consumer sovereignty and the competition it fosters.

In conclusion, consumer sovereignty means that consumers have the power to influence the allocation of resources through their purchasing decisions and preferences. It is the consumers who ultimately determine what goods and services are produced and how resources are allocated in an economy.